This week, the blockchain community is buzzing as a dozen or so issuers prepare to launch their spot bitcoin ETFs. Some of the biggest fund groups have chosen to stay out of this fracas.
BlackRock, world’s biggest asset manager, is leading the pack of traditional financial giants. VettaFi reports that BlackRock manages an astounding $2.6 trillion worth of assets through its US ETFs. The proposed Bitcoin ETF is an important move that signals the merging of conventional investments with decentralized assets.
Invesco is another major player, ranking 4th in ETF assets at $450 billion. In 2021 the company partnered up with the crypto-focused Galaxy Digital. It filed its last spot bitcoin ETF in 2023.
Not all ETFs have chosen this fund.
Vanguard, State Street and Charles Schwab — respectively managing $2.3 trillion, $1.1 trillion, and $315 billion, and ranked among the top five issuers by ETF assets globally — seem to have chosen not to get involved.
“Vanguard has no intent to offer a spot bitcoin ETF or any other crypto-related products,” Blockworks received a message from a spokesperson on Tuesday.
“Vanguard believes that the investment case for cryptocurrencies is weak,” The representative said. “Unlike stocks and bonds, most crypto assets lack intrinsic economic value and generate no cash flows. And cryptocurrencies’ high volatility runs counter to our goal of helping investors generate positive real returns over the long term.”
State Street Global Advisors — ranking third in US ETF assets under management — launched the industry’s first ETF, the SPDR S&P 500 ETF (SPY), in 1993. This ETF is the biggest physically-backed ETF that focuses on Gold, which bitcoin can be compared to.
State Street, despite its reputation as an ETF innovator, chose not to join the race of about a dozen firms that entered into the bitcoin spot ETF.
“We continuously evaluate our lineup of ETFs, and at this time we do not offer a crypto ETF,” A spokesperson declined to provide any further comment on Tuesday.
Sumit Roy is a senior analyst at ETF.com. He noted State Street as being the largest custody provider in the world and that it has developed digital asset-focused solutions.
At the end of September, there were approximately 40 trillion dollars in assets that State Street was managing and custodial. State Street’s digital finance division was launched in June 2021. In March 2022, a licensing deal with Copper.co to create a digital custodial offering for institutions took place.
“It’s possible that the firm is focusing its energy on that part of the ecosystem rather than getting involved in the crowded spot bitcoin ETF race,” Roy Tells Blockworks “It’s hard to imagine that they will launch a spot bitcoin ETF in the future if they haven’t thrown their hat in the ring already.”
Charles Schwab’s asset management division has also not applied for an ETF that tracks bitcoins on a spot basis.
David Botset was the Schwab Asset Management’s head of Equity Product Management and Innovation in January 2020. He told Blockworks at that time, “The company is evaluating its equity products.” “opportunities such as spot cryptocurrency or blockchain technologies in the form of an ETF.” Later that year, the firm introduced an ETF that held crypto-related stock.
Schwab’s spokesperson declined on Tuesday to provide any comment regarding future plans for crypto ETFs.
“I don’t think anyone else will try to launch a vanilla spot bitcoin ETF in the future, but I do expect that there will be more creative funds that add other types of exposures on top of just bitcoin,” Roy said. “A covered call bitcoin ETF, for instance, is one we are likely to see in the future.”
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